QUICK FACTS
- Recently, the Department of Health and Human Services (HHS) issued its final Notice of Benefit and Payment Parameters for 2020.
- The required contribution percentage for the individual mandate’s affordability exemption will decrease for 2020.
- Under the final rule, the Affordable Care Act’s (ACA’s) out-of-pocket maximum limit will increase to $8,150 (self-only coverage) and $16,300 (family coverage) in 2020.
BACKGROUND
On April 18, 2019, HHS released its Final Notice of Benefit and Payment Parameters for 2020. The final rule describes benefit and payment parameters under the Affordable Care Act (ACA) for the 2020 benefit year.
Updated standards included in the rule relate to:
- maximum annual out-of-pocket limits on cost-sharing;
- the individual mandate’s affordability exemption;
- special enrollment periods in the Marketplace; and
- essential health benefits (EHBs) benchmark plan options.
Maximum annual out-of-pocket limits on cost-sharing
The ACA requires non-grandfathered plans to comply with an overall annual limit (or out-of-pocket maximum) on EHBs. The ACA requires the out-of-pocket maximum to be updated annually based on the percent increase in average premiums per person for health insurance coverage. Based on the final rule, the 2020 out-of-pocket maximum will increase to $8,150 for self-only coverage and $16,300 for family coverage (up from $7,900 and $15,800, respectively, for 2019).
The individual mandate’s affordability exemption
Under the ACA, individuals who lack access to affordable minimum essential coverage (MEC) are exempt from the individual mandate penalty. For purposes of this exemption, coverage is considered affordable or an employee if the required contribution for the lowest-cost, self-only coverage does not exceed 8% of household income. The recent tax reform law reduced the ACA’s individual mandate penalty to zero for individuals not retaining MEC after December 31, 2018. However, the final rule notes that individuals may still need to seek a hardship exemption for 2019 and future years to qualify for enrollment in Marketplace-based catastrophic coverage. In 2020, an individual will qualify for this affordability exemption if he or she must pay more than 8.24% of his or her household income for MEC.
Marketplace special enrollment periods
Certain special enrollment periods (SEPs) are available for Marketplace coverage to ensure that people who lose health insurance during the year (or who experience other qualifying events) have the opportunity to enroll in coverage. The 2020 final rule establishes a new SEP that allows individuals enrolled in off-Marketplace individual health insurance coverage to be newly eligible for Marketplace subsidies if their income changes. The SEP is available to qualified individuals and their dependents who experience circumstances that result in a decrease in income if the following are true:
- both the individual and dependents are newly determined as eligible for a Marketplace subsidy; and
- the previously enrolled individual coverage was MEC for one or more days during the 60 days preceding the change in financial circumstances.
EHB benchmark plan options
The 2019 final payment rule, allowed states to maintain their 2017 benchmark plan or for plan years beginning on January 1, 2020, or choose a new EHB benchmark plan annually from several plan options for greater flexibility. For more information, see the EPIC Compliance Alert Final 2019 Benefit and Payment Parameters.
The 2020 final rule makes no changes to the 2019 rule, but lays out new deadlines for states to notify CMS of changes to an EHB benchmark plan. States must submit required documentation to CMS by May 6, 2019, for the 2021 plan year, and by May 8, 2020, for the 2022 plan year.
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EPIC offers this material for general information only. EPIC does not intend this material to be, nor may any person receiving this information construe or rely on this material as, tax or legal advice. The matters addressed in this document and any related discussions or correspondence should be reviewed and discussed with legal counsel prior to acting or relying on these materials.
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